PERFORMANCE &

POTENTIAL
APPRAISAL
MHA702 HUMAN RESOURCE PLANNING

P R E S E N T E D B Y: B A R B E E L I N A I D I N G

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LEARNING OBJECTIVES
•MEANING OF PERFORMANCE AND POTENTIAL APPRAISAL
•PURPOSE AND TYPES OF PERFORMANCE APPRAISAL
•INDICATORS AND OBJECTIVES OF POTENTIAL APPRAISAL
•TECHNIQUES OF POTENTIAL APPRAISAL
•CRITICISM OF PERFORMANCE & POTENTIAL APPRAISAL

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PERFORMANCE APPRAISAL
•A performance appraisal is a regular review of an
employee’s performance and contribution to an
organisation
•Also known as annual review, employee appraisal,
performance review or evaluation.
•A performance appraisal evaluates an employee’s skills,
achievements, and growth, or lack thereof.

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PURPOSE OF PERFORMANCE
APPRAISAL
•Performance appraisals are usually designed by HR departments as a way for
employees to develop in their careers.
•They provide individuals with feedback on their job performance, ensuring that
employees are managing and meeting the goals expected of them.
•Because companies have a limited pool of funds from which to award
incentives, such as raises and bonuses, performance appraisals help determine
how to allocate those funds.
•Performance appraisals also help employers to create plans for employee
development through trainings and increased responsibilities

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TYPES OF PERFORMANCE
APPRAISAL
Most performance appraisals are top-down, meaning that
supervisors evaluate their staff with no input from the subject. But
there are other types:
•SELF-ASSESSMENT: Individuals rate their job performance and
behavior.
•PEER-ASSESSMENT: An individual’s work group or co-workers rate
their performance.
•360-DEGREE FEEDBACK ASSESSMENT: Includes input from an
individual, supervisor, and peers.

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POTENTIAL APPRAISAL
•The potential appraisal is a future-oriented appraisal to
measure the potentiality of an employee for future higher
positions.
•To express it in simple words, performance appraisal is an
estimation of how an employee did while potential
appraisal is an estimation of how well he might do.

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Potential appraisal is defined as, “a process of determining an
employee’s strengths and weaknesses with a view to use this as a
predictor of his future performance. This would help determine the
promotability of an individual to a higher position and help chalk out
his career plan”.

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POTENTIAL INDICATORS
•SENSE OF REALITY
•POWER OF ANALYSIS
•BREADTH OF VISION
•PERSUASIVENESS

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 7 OBJECTIVES OF POTENTIAL
APPRAISAL
•Identification of employees having capabilities to perform higher level jobs
•Assessment of general potential
•Identification of training needs of employees
•Implementing succession planning activities
•Assisting employees in personal development process
•Helping organization to decide its strategy
•Helping organization to survive, grow and develop

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6 TECHNIQUES OF POTENTIAL
APPRAISAL
•Self- Appraisal
•Peer- Appraisal
•Superior-Appraisal
•MBO
•Psychometric Tests
•Management Role-playing exercises

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CRITICISM OF PERFORMANCE &
POTENTIAL APPRAISAL
•Distrust of the appraisal can lead to issues between subordinates and
supervisors or a situation in which employees merely tailor their input to please
their employer.
•Performance and Potential appraisals can lead to the adoption of unreasonable
goals that demoralize workers or incentivize them to engage in unethical
practices.
•Such appraisals may lead to unfair evaluations in which employees are judged
not by their accomplishments but by their likability. They can also lead to
managers giving underperforming staff a good evaluation to avoid souring their
relationship.

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SUMMARY
•Potential Appraisal is a forward looking process whether
performance appraisal is a backward looking process.
• Good or worse assessment results of performance appraisal may
not be a good factor for potential appraisal.
• Performance appraisal encourages employees to reinforce their
strengths and overcome their weaknesses. At this stage, the
employers need to understand the indicators of potential.

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